NOTE:
THIS NEWS ITEM IS DESIGNED TO HELP THE PUBLIC UNDERSTAND
DEVELOPMENTS IN THE WTO. WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE THE
CONTENTS ARE ACCURATE, IT DOES NOT PREJUDICE MEMBER GOVERNMENTS’
POSITIONS. THE OFFICIAL RECORD IS IN THE
MEETING’S MINUTES

Par.6. The Trade-Related Aspects of
Intellectual Property Rights (TRIPS) Council reviews the so-called Paragraph 6
system annually, but for the first time since the system was agreed in 2003, a
whole day was set aside for WTO members to discuss this agenda item in a more
structured way, the length of the debate on this and other topics taking the
meeting late into the evening of 27 October.

The “Par.6” system (nicknamed after the sixth
paragraph of the Doha Declaration on TRIPS and Health) was designed to tackle a
specific legal issue, unblocking a provision of the TRIPS Agreement that
prevented governments from licensing the production of generic versions of
patented drugs exclusively for export to countries unable to make the medicines.

The World Health Organization (WHO), an observer in
the TRIPS Council, added a new angle to the on-going debate about whether the
fact that the system has been used only once shows that it is too cumbersome.

The WHO said that the “Par.6” system will become more
important as newer HIV/AIDS medicines are needed in the future. Prices of “first
line” treatments have fallen drastically because of competition from generics
(with suppliers such as India not having patent protection until 2005), allowing
a 12-fold increase in poor patients receiving treatment. However, since India
had introduced full patent protection in the pharmaceutical sector in 2005,
newer treatments for HIV/AIDS, tuberculosis and cancer may need the system in
the future to increase competition from generics, the WHO said. (More below.)

Enforcement. The discussion on
enforcement echoed the debate in the previous meeting
in June, this time with the focus on the latest version of the draft
Anti-Counterfeiting Trade Agreement (ACTA), which some WTO members are
negotiating amongst themselves and is said to be near completion after 11 rounds
of negotiation.

Critics said ACTA threatens the negotiated balance of
the TRIPS Agreement and could lead to countries put under pressure to adopt
standards that are stricter than TRIPS (“TRIPS-plus”) against their interests.
They argue that the negotiation is untransparent and undermines multilateralism.

ACTA participants said that their negotiations do not
affect or undermine rights and obligations under TRIPS and that clearer
standards are needed to tackle the real dangers arising from counterfeit
products such as medicines and spare parts; they point to public interest
safeguards built into the negotiating text.

Biodiversity. The discussion on
biopiracy and related issues included a proposal for the Secretariat of the
Convention on Biological Diversity to brief the TRIPS Council on the CBD
negotiations on access and benefit sharing which were concluded that same week
in Nagoya, Japan. There was no consensus on this. (More below.)

Technical assistance. The specific needs
and interests of least developed countries (LDCs) were given particular
attention, with a review of measures to promote more tailored technical
assistance, incentives for technology transfer, and
least developed countries’
priority needs to implement TRIPS,
with Rwanda and Tanzania the latest to supply their assessments.

TRIPS and public health: the Par.6 system and the
annual review
See explanation

Background: The 2003 “waiver” (and the
2005 pending TRIPS amendment) removes a requirement that generics produced under
compulsory licence should be mainly for the domestic market. This constrained
exporting to countries that could not make the medicines, because the major (or
“predominant”) part of production had to go to the domestic market — only what
was left could be exported. A compulsory licence exclusively for export was not
possible. The new system is sometimes called the “Paragraph 6” system after the
provision in the 2001 Doha Declaration on TRIPS and Public Health that led to
its creation.

The TRIPS Council reviews how well the system is
working every year, a requirement for any waiver under
Art.IX.4 (9.4) of the
WTO Agreement.
This usually takes place in October, but so far with little depth or detail.
Members sought a more structured and detailed review for 2010 and therefore the
whole day of 27 October was allocated for this agenda item.

Chairperson Martin Glass organized the discussion into
topics to give it more focus, and encouraged members to report in detail on
their national experiences. The topics covered actual experiences in using the
system and any obstacles confronted, various legal aspects such as any domestic
legislation needed and the international treaty process of accepting the TRIPS
Agreement amendment, capacity building, alternative ways of achieving access to
medicines, and what to do next.

The debate

Some developing countries continued to argue that the
“Par.6” system must be too cumbersome since it has only been used once.

India said an application for compulsory licences
under its Patent Act for three medicines to be exported to Nepal was withdrawn
in an early stage. It said the Indian generics manufacturer concerned withdrew
the request because the potential importing country had not granted a compulsory
license to import the medicines, nor had it notified the TRIPS Council of its
intention to do so.

This, India said, shows that the system’s notification
requirements and built-in safeguards are too costly and burdensome and represent
a disincentive for the generic supplier to produce.

Some developed countries said detailed information
supplied by Canada shows that the system is not too cumbersome. They questioned
whether attempts to use the system that were subsequently withdrawn were because
of the system itself or because of other reasons such as prices and competition
from alternative suppliers.

They asked India for details of what exactly the
Indian company found to be too burdensome. They complained that too little
information had been provided on what exactly might be the problems with the
system other than the fact that it had only been used once, and that potential
importing countries had not described their experiences.

They argued that success should not be measured by the
use of this one tool, but the full range of issues affecting access to medicines
— including health infrastructure, taxes and import duties — and the array of
measures available to governments — such as new bulk procurement methods. The
fact that there are alternative ways of making medicines affordable should not
be taken as evidence that the “Par.6” system is a failure, Australia said.

Some countries did not express a view either way. They
simply asked questions about operational details such as royalty payments
(Canada and Switzerland include the importing country’s level of development in
the formula) and how the medicine’s efficacy and safety would be ensured when
exporting countries use the system.

Chairperson Martin Glass described the review as a
useful exchange of information. He will consult members on what to do next. As
an annual review, the subject will be on the council’s agenda again in October
2011. Some members would like a follow-up session in the next meeting in March
2011.

Some, particularly developing countries, also want a
workshop that would allow pharmaceutical companies, non-governmental
organizations and others to participate. These countries argue that some
questions could not be answered in this review because companies and NGOs were
not present. Some other countries questioned whether members have discussed the
issue enough under their own responsibility to justify a workshop with other
participants.

Members’ experienceCanada is the only country that has used
the system as an exporter (with Rwanda as the importer). In this meeting, Canada
added considerable detail to
the information it supplied previously.

It described its <Access to Medicines Regime (CAMR),
which came into force in May 2005 and repeated its assessment that CAMR was not
the main cause of the length of time taken for the medicine (Apotex’s generic
Apo-TriAvir) to be approved for production and exported under the system to
Rwanda in 2008 and 2009.

Among the reasons were the fact that Apotex did not
have a buyer when it first sought approval for its generic in 2006 and the
procurement tender in Rwanda after the compulsory licence had been issued in
September 2007. (Rwanda did not contribute to the session.)

Canada said that the generic medicine was approved by
Health Canada in less than six months through a special review stream
established by the Health Ministry in order to speed up approval e approval
process, instead of the usual time of up to a year. The compulsory licence
itself was approved in only 15 days in September 2007, Canada said.

The requirement to negotiate a voluntary licence with
the patent holders first (GlaxoSmithKline, Boehringer Ingelheim and Shire
BioChem Inc) was handled swiftly and the three waived the royalty payment that
was eventually offered to them, Canada went on. It added that Apotex eventually
secured the deal to sell to Rwanda in the face of competition from other
generics suppliers in an open tender by selling at below cost (19 cents per
pill).

Canada rejected some members’ arguments that
anti-diversion conditions (preventing the medicines going to the wrong markets)
are burdensome since the colouring and labelling requirements and the need to
publish information on a website are simple.

India’s contribution included an account
of an Indian company seeking compulsory licences to export to Nepal in September
2007. The request was dropped after the Indian company claimed that the
importing country had found the conditions for using the system too onerous to
proceed, India said.

WHO
The World Health Organization listed four factors affecting access to medicines:

rational selection of medicines, for example via the
WHO model list of essential medicines

affordable prices

sustainable financing: “per capita expenditure on
medicines in real terms remains regrettably very low in poor countries,” the WHO
said.

On prices, the WHO noted that 90% of medicines on its
list of essential medicines are not under patent protection but a majority of
patients in low income countries cannot acquire them because of lack of supply
of generics.

It said competition from generics has slashed prices
of “first line antiretroviral medicines” from over US$10,000 per patient per
year in 2002 to $100 in 2010. The “Par.6” system will become more important when
newer medicines are needed, and should be used “once it becomes clear that no
other possibility exists” for acquiring the medicines at affordable prices, the
WHO said.

Legal issues
The WTO Secretariat explained the legal difference between countries introducing
laws to implement the system and their notifying the WTO that they have accepted
the amendment. The two are separate and do not depend on each other. (Canada
developed its CAMR in 2005, to implement the 2003 WTO waiver, before the
amendment was agreed; some countries have accepted the amendment before or
without introducing implementing legislation.)

Acceptance: Under international treaty
law, countries have to formally state that they agree to be bound by a treaty,
in this case the amended TRIPS Agreement, which will take effect when two thirds
of the WTO’s membership has accepted the amendment. The list of acceptances is
here. Since the last meeting, Uganda and
Mongolia have accepted it.

When a country accepts the amendment, it effectively
affirms that it accepts an additional flexibility in the TRIPS agreement, and
that other countries have the legal right to use the system if they choose to do
so. Accepting the amendment does not mean that the country necessarily wants to
use the system itself. Nor does it mean the country has to implement the system
through its own laws or regulations.

Implementing law: These are changes to
allow the system to be used by the country either as an importer or exporter or
both under their own laws or regulations. Countries that have formally notified
changes to their domestic laws or regulations: Norway (to export), Canada (to
export), India (to export), the EU (to export), Hong Kong China (to export, and
to import in extreme urgency), Switzerland (to export), the Philippines (to
import and export), Singapore (to import in extreme urgency), Albania (to
export) and Croatia (to export).

The ‘triplets’:
Article 27.3(b), biodiversity and traditional knowledge
See explanation

New in this debate was a call from India and a number
of other countries for the Secretariat of the Convention on Biological Diversity
(CBD) to be invited to brief the next TRIPS Council meeting (in March) about the
negotiations on a CBD protocol on access and benefit sharing that were concluded
in Nagoya, Japan at the same time as this TRIPS Council meeting. The US opposed
on the grounds that the CBD is not an observer in the TRIPS Council — the US
also opposes making the CBD a TRIPS Council observer.

Apart from that, the discussion largely echoed the
debate in the June meeting,
with the focus again on two related issues: the “disclosure proposal” (explained
via the link above) and a proposal from Bolivia that would include a ban on
patenting all life forms
IP/C/W/545.

Members broadly agree on the need to avoid “biopiracy”
and “bad” patents that do not meet accepted standards. They also agree that the
principles of “access and benefit sharing” (ABS) and “prior informed consent” (PIC)
should be applied to intellectual property protection for inventions involving
genetic material or traditional knowledge or both. They disagree on how to
achieve this.

Speaking in favour of “disclosure” this time were:
China, India, Cuba, Ecuador, least-developed countries (Angola speaking),
Colombia, Indonesia, Peru, Uruguay, South Africa, Brazil, Egypt, the African
Group (Nigeria speaking), Switzerland, the EU, Norway (which has its own
version). Several called for Director-General Pascal Lamy to continue his
consultations.

Speaking against were: Israel, Canada, Japan,
Australia, Argentina, Repupblic of Korea, New Zealand, and the US.

Some countries either specifically opposed Bolivia’s
proposal for a ban on patenting all life forms or described provisions in their
laws allowing patenting for some types of life forms (such as micro-organisms)
or for biotechnology in general. They included: India, Brazil, Canada,
Switzerland, Japan, Norway, Rep.Korea, and Chinese Taipei.

Article 27.3(b) deals with patentability or
non-patentability of plant and animal inventions, and the protection of plant
varieties. Broadly speaking, it allows governments to exclude some kinds of
inventions from patenting, i.e. plants, animals and “essentially” biological
processes (but micro-organisms, and non-biological and microbiological processes
have to be eligible for patents). However, plant varieties have to be eligible
for protection either through patent protection or a system created specifically
for the purpose (“sui generis”), or a combination of the two.

In other words, Art.27.3(b) offers countries the
choice of whether to protect or not in some circumstances, and requires them to
provide protection of some kind in others. Bolivia’s proposed ban, first
presented in March, would turn that around.

Chairperson:
Mr Martin Glass of Hong Kong, China.

Next meetings

TRIPS COUNCIL (REGULAR) MEETINGS (could change):

Tuesday-Wednesday 1—2 March 2011

Tuesday-Wednesday 7—8 June 2011

Tuesday-Wednesday 25—26 October 2011

JARGON BUSTER

• CBD: Convention on Biological Diversity.

• geographical indications (GIs): Place names (or
words associated with a place) used to identify products
(for example, “Champagne”, “Tequila” or “Roquefort”) which
have a particular quality, reputation or other
characteristic because they come from that place.

• modalities: The way or method of doing something
— in the Doha Development Agenda negotiations these are
blueprints for the final deal, eg, how to cut tariffs, and
reduce agricultural subsidies and support, along with
flexibilities to deal with various sensitivities. Once the
modalities have been agreed, countries can apply the
formulas to tariffs on thousands of products and to
various support programmes.

• special sessions: meetings of WTO councils and
committees focusing only on the Doha Development Agenda
negotiations.